Palantir, the simple and honest answer to that is you never know. Lehman Brothers was a 100+ year institution and it still failed. You might be right. It may exist a 100 years from now but in what form and would it have generated enough value. Today, I don’t think Buffet himself would have invested in BRK. By his own admission size is the enemy of returns and Berkshire is pretty much at a size where any additional acquisition only makes a marginal impact on earnings. If you’re a guy who looks at the more qualitative aspects why not look at younger companies with good ideas? I mean shouldn’t we try to be more like sequoia capital than WEB in picking our stocks. If you’re good at the qualitative aspects even being right in 2 out of 10 investments could produce stellar returns. This is no way an argument against your investment philosophy. I am just trying to think independently.
Disclaimer, I bought BRK when P/B = 1. I think it is worth considerably more than that, and I think it will last a long time. I don’t need growth to create value. Even with no growth I’m expecting > 40% upside. I don’t disagree with you on picking smaller stocks, I was looking at small stocks up until fall of 2010 when they started rising. However, I think you should broaden your scope to include mature businesses as well. There is less growth, but if you can get a good price you will generate alpha.
size doesn’t matter for me…BRK.B is excellent…i made a huge mistake not buying that and Fairfax…but…in the long run, the 15% i missed out on ain’t no biggie…thing i hate about BRK.B is they don’t pay a dividend…
ubermensch -any small/micro ideas? No special situations, just normal good companies just doing their business.
please provide your weekly update…there were a few articles i read over the weekend on intel and microsoft (barrons, businessweek)…your thoughts?
I haven’t seen much change on MSFT prospects, their presentation at CES was well received. (I’ve seen their Windows Phone, it has a super nice interface, IMO better than Android). I’m probably going to submit an application for Value Investors Club with a pitch for Northrop Grumman, if only this damn L3 would go away. I am long CCJ, target price 30+. Sadly I did not buy HII in October. Can’t recall why…dammit it was a perfect Joel Greenblatt style spinoff play.
your price target is baloney…
Great idea for a thread. I need to invest my new Roth contributions, hopefully soon. I’m thinking of putting some of it into a high yielding REIT for the income, but I don’t know what to do with the rest. I overhauled my portfolio at the end of December for tax reasons and I just need to rebalance, so I’m more/less starting from scratch in 2012.
Hello all, been super busy with work - modelling day and night is no fun. Good to see this thread is still up and about!
I have a feeling Buffett may plot a position in Siemens AG (SI). Pretty good price. It has all of the characteristics, large mature company with strong moats, diversified product base and will likely be around for a long time. It’s like a European version of GE. Furthermore, Buffett has pointed out that many of his investments have been made in times of macroeconomic uncertainty, and SI prospects have likely been hit substantially by Euro crisis. I havent gotten into the firm much, damn L3.
not bad palantir, i will look into SI…i have yet to buy an industrial stock yet…
just printed out annual report and the numbers look ok so far…valuation is attractive…now lets see if I can understand what they do…
With a firm like Siemens that has a diversified industrial base I don’t think it’s that important to get all the details as that will probably bog down the analysis if you start looking at every product they sell. I think it’s more important to quickly find out whether they have a moat and whether a conservative estimation of future earnings can justify or even exceed what the market price implies.
Their annual report is over 300 pages long… how would you determine if they have a moat in this case? to me at this moment, their moat is their ability to produce high quality products and charge an above average price…they have brand recognition as well, but so does GE, hitachi etc…i’ll have to masturbate to this when i get home today…keep me up to date with what you find…
I think their moat is basically what you said, they’re a respected name that makes expensive things, everything from home appliances to (formerly) nuclear reactors. (regarding that, I believe Iran’s enrichment facilities use Siemens software). They may not have an edge over a firm like GE, in fact I think they’re very comparable to GE, but I think these large conglomerates will tend to coexist and perhaps even cooperate. I wouldn’t consider GE because it simply has terrible financials. 450B in debt wtf?
that comes from their finance business…i’ll keep pushing…will have results later on during the week…
It seems to me from their annual report that they are transitioning from being an industrials manufacture oriented company to more and more a services-type firm with its associated higher margins. Te closest comparison I can think of is IBM. IBM is also moving towards more of a software/services type firm. Most importantly though, Siemens seems diversified, with fingers in many many pies. As for what will unlock value, a simple dividend increase would do. Remember, they make money in all currenceis, not just euro. http://www.sec.gov/Archives/edgar/data/1135644/000119312511325840/d259938d20f.htm#rom259938_8
i’m still going through it…its a good industrial firm from what I can see…but pretty busy with all the earnings coming out this week i won’t have time to sit and think til the weekend… i’m not so sure if I can put 20% of my money in this yet…maybe 5% but whats the point in that? I would look at other industrial companies cause their margins, ROEs etc are closer to them…they display the same cyclicalities as well you can see how they really measure up…on relative rankings, i can see they’re at least average…
Yes take your time, it’s no hurry, I think this stock will be “attractively priced” for a while. I’m not confident there needs to be a dominant edge over other industrial firms, I think it just needs to be competitive enough to defend its position. And if we can get the right price it could prove to be a very good investment in a stable firm. But I do think that moving into high margin areas like software will prove to be a powerful edge combined with its strong brand name.
I like SI too. I’m so short Europe right now this would be a good way to maybe hedge that a bit